Annual report state-owned companies

Transcription

1 Contents 3 Financial overview 59 Dom Shvetsii 91 Swedesurvey 4 Foreword 60 Dramaten 92 Swedfund This annual report can be ordered via: Article number: N Annual Report State-owned companies Annual report state-owned companies 6 Events in brief 11 Active ownership 14 Company case Swedavia 18 Company case Svevia 20 Nominations to company boards 25 Targets and follow-up 26 Financial targets 28 Facts The important role of the cost of capital 32 Sustainable business 35 Company case Bilprovningen 37 Company case Infranord 38 Public policy targets 40 Company case SEK 42 Remuneration and other terms of employment 44 State-owned company portfolio 47 Valuation of the company portfolio 48 Publicly traded holdings 49 How the state s finances are affected by company divestments and dividends 50 Companies 51 Akademiska Hus 52 Almi Företagspartner 53 APL (Apotek Produktion & Laboratorier) 54 Apoteket 55 Apoteksgruppen 56 Arlandabanan Infrastructure 57 Bilprovningen 58 Bostadsgaranti 61 ESS (European Spallation Source) 62 Fouriertransform 63 Green Cargo 64 Göta kanalbolag 65 Infranord 66 Inlandsinnovation 67 Jernhusen 68 Lernia 69 LKAB 70 Metria 71 Miljömärkning Sverige 72 Operan 73 Orio 74 PostNord 75 RISE 76 Samhall 77 SAS 78 SBAB 79 SEK 80 SJ 81 SOS Alarm 82 Specialfastigheter 83 SSC (Svenska rymdaktiebolaget) 84 Statens Bostadsomvandling 85 Sveaskog 86 Svedab 87 Svenska Skeppshypotek 88 Svenska Spel 89 Svevia 90 Swedavia 93 Systembolaget 94 TeliaSonera 95 Teracom Boxer Group 96 Vasallen 97 Vattenfall 98 VisitSweden 99 Voksenåsen 100 Other companies and operations 101 Liquidated companies and companies under liquidation 102 State ownership in modern times 106 Accounting principles 107 Definitions and abbreviations 108 State-owned companies in figures 110 List of Government Bills 112 Changes in executive management and boards 114 Board members elected by the Annual General Meeting 121 Companies reporting dates 122 The State s Ownership Policy Guidelines for external reporting 128 Guidelines for terms of employment for senior executives 129 Management responsibility for state-owned companies 131 Addresses

2 Miljömärkning Sverige OAO Dom Shvetsii How the state-owned companies are governed Number of board members Number of employees The Government has been commissioned by the Riksdag to actively manage the state s assets. The Government Offices and the various ministries assist the Government in its work and manage 49 companies: 41 wholly owned and 8 partly owned. ORGANISATION The Riksdag ,000 Corporate governance is exercised primarily through the board nomination process at Annual General Meetings, in accordance with the State s Ownership Policy, including its guidelines, and by means of efficient capital structure. The companies are followed up and assessed through analyses and different types of reports from the companies. Targets beyond the generation of financial value are also assessed. Within the Ministry of Enterprise and Innovation, there is a specialised investment management organisation that is divided into two divisions. These are responsible for the development and coordin ation of corporate governance at the Government Offices and for the active ownership of 41 of the companies. The responsibility for the remaining, of the total 49 companies, lies with other ministries. Ministry of Enterprise and Innovation Division for Innovation and State-owned Companies Division for State-owned Enterprises Division for Corporate Governance and Analysis The Government The Government Offices Other ministries responsible for companies The companies that are wholly or partly owned by the state have a total of 343 board members, including chairpersons. There are 283 board members in the companies wholly owned by the state. Estimated value 460 billion In total, slightly more than 163,000 people are employed by the state-owned companies, including the associated companies. The companies that are wholly owned by the state have about 125,000 employees. The state-owned companies represent considerable value. The combined value of the state-owned company portfolio which is owned jointly by the people of Sweden is calculated at SEK 460 billion. Read more on pages Gender balance Board members 49% Chairman of the Board 46% The state-owned companies act as good examples in having a high proportion of women on their boards and now also chairing the boards. Including chairpersons, 49 per cent of the board members in companies wholly-owned by the state are women. Among the publicly traded companies, the proportion of women board members is 29 per cent according to SIS Ägarservice. The Government s target is for there to be at least 40 per cent of each gender on each board. In the state-owned companies, no fewer than 46 per cent of chairpersons are women, compared with 41 per cent last year and 23 per cent in Among the publicly traded companies, the proportion of women chairpersons is only 5 per cent according to SIS Ägarservice. VALUATION OF PORTFOLIO OF STATE-OWNED COMPANIES 1) SEK billion ) 2) ) Value as per 31 December. 2) Decreased ownership in Nordea Bank. BREAKDOWN BY SECTOR Basic materials/energy 32 % Telecommunication 18 % Service 17 % Real estate 12 % Financials 10 % Consumer goods 5 % Infrastructure 3 % Transport 3 % BASIC MATERIALS/ENERGY: Ersättningsmark, LKAB, Orio, Sveaskog, Vattenfall TELECOM: TeliaSonera SERVICE: APL, Bilprovningen, Lernia, Metria, Miljömärkning Sverige, Samhall, SOS Alarm, Svenska Spel, Swedesurvey REAL ESTATE: Akademiska Hus, Jernhusen, Specialfastigheter, Statens bostadsomvandling, Svedab, Vasallen FINANCIALS: Almi Företagspartner, Bostadsgaranti, Fouriertransform, Inlandsinnovation, RISE, SBAB, SEK, Svenska Skeppshypotek, Swedfund CONSUMER GOODS: Apoteket, Apoteksgruppen, Systembolaget INFRASTRUCTURE: Arlandabanan, Göta kanalbolag, Infranord, SSC, Svevia, Swedavia, Teracom Boxer Group TRANSPORT: Green Cargo, PostNord, SAS, SJ OTHERS: Dramaten, ESS, Operan, VisitSweden The Annual Report has been produced by the Ministry of Enterprise and Innovation in cooperation with Grayling. Photo: cover Mats Engfors/Lernia, Cecilia Larsson/imagebank.sweden.se, Niclas Albinsson/Göta kanalbolag, Mattias Forsberg/Sveaskog, Specialfastigheter, SAS p. 5 Kristian Pohl/Government Offices, p. 7 (watering can) Mostphotos, p. 8 (Rosetta) ESA, p. 41 (containers) Mostphotos, p. 102 (lunar landing) Nasa, p. 104 (mobile phone) istockphoto, p. 105 (car) Mostphotos. Other photos were provided by the companies included in the Annual Report, unless stated otherwise adjacent to the photo. Repro and print: EO Grafiska 2015.

3 Net turnover Wholly-owned companies and subsidiaries Including associated companies SEK 350 SEK 397 billion billion In, net turnover for the wholly state-owned companies and their subsidiaries decreased by 2.2 per cent to SEK 350 billion. Including associated companies, net turnover in was SEK 397 billion, which also represented a decrease of 2.2 per cent. Dividends and profit Dividend SEK 18.1 billion Profit SEK 16.5 billion The state-owned companies make a significant contribution to the state treasury. For the fiscal year, the state s dividends increased by 1.9 per cent to SEK 18.1 billion. Read more on pages Combined net profit for was SEK 16.5 billion, an increase of almost 15.9 per cent. NET PROFIT FOR JAN DEC (SEK MILLION), COMPANIES WITH THE GREATEST IMPACT ON EARNINGS Vattenfall TeliaSonera Akademiska Hus Svenska Spel Sveaskog Specialfastigheter SEK Other TOTAL 8,284 5,817 5,215 4,763 1,691 1,390 1,260 4,671 16,523 15,000 10,000 5, ,000 10,000 15,000 20,000 ANNUAL REPORT STATE-OWNED COMPANIES 1

4 The state is a significant company owner in Sweden. The state-owned company port folio includes 49 wholly and partly owned companies, of which two are listed. The state bears a substantial responsibility to be an active and professional owner. For the government, the overall objective is for the companies to generate value and, where relevant, to ensure that public policy assignments are executed well. 2 ANNUAL REPORT STATE-OWNED COMPANIES

5 Financial overview STATE-OWNED COMPANIES, TOTAL SEK billion 2013 Change, % Net turnover Net turnover, including associated companies Profit before changes in value Changes in value Operating profit (EBIT) Profit before tax Net profit Gross investments Cash flow from operating activities (excluding SEK and SBAB) Total equity Total assets 1, , Number of employees, excluding associated companies (thousands) ) ) 2.7 Number of employees, including associated companies (thousands) ) ) 3.4 Dividend Estimated value Return on equity (%) Equity/assets ratio (%) ) Of whom women accounted for 34 (34) per cent and men for 66 (66) per cent. 2) Of whom women accounted for 36 (36) per cent and men for 64 (64) per cent. NET TURNOVER SEK billion PROFIT BEFORE TAX SEK billion GROSS INVESTMENTS SEK billion RETURN ON EQUITY % NUMBER OF EMPLOYEES Thousands MARKET VALUE SEK billion ANNUAL REPORT STATE-OWNED COMPANIES 3

6 FOREWORD Although turnover decreased in, the profitability of the state-owned companies improved In, the profitability in the state-owned companies strengthened. Improved profits for Akademiska Hus, SBAB and Swedavia strengthened overall profit by more than SEK 3 billion. Vattenfall s earnings continue to be burdened by impairments. Falling iron ore prices and increased expenses for community transformation, primarily in Kiruna, burdened LKAB s earnings heavily. The state-owned companies are owned collectively by the Swedish people and are therefore an important asset for the entire country. Governing the state-owned companies is a task that imposes considerable responsibility, that must be performed in an active and professional manner with value creation as an overarching objective. This means that the companies must act efficiently, profitably and long term, and should be given opportunities for development. Most of the companies operate in competitive markets. Accordingly, it is particularly important that they be subject to market requirements to ensure that competition is conducted on equal terms between publicly and privately owned companies. Being responsible for ownership issues, I consider ensuring the public s confidence in the state-owned companies to be one of my most important tasks. Key words in the management of the state-owned companies are openness, active ownership, professionalism and good order. Ultimately, the companies are owned by the Swedish people which demands transparancy and professional accounting. In addition to accounting legislation and I am convinced that sustainability is one of the greatest challenges facing trade and industry but also that the transition to a sustainable society offers an amazing number of business opportunities. generally accepted accounting principles, the state-owned companies are required to present annual, quarterly and year-end reports according to the same rules as listed companies. The annual report and the communication to the Riksdag (Swedish parliament) are important instruments in monitoring the development of the companies. I am convinced that sustainability is one of the greatest challenges facing trade and industry in the years to come but also that the transition to a sustainable society offers an amazing number of business opportunities. Proactive sustainability work secures strong long-term growth in the state-owned companies. Accordingly, I have made it clear to the boards of state-owned companies that sustainable business practices are an issue of business strategy and will be central to this government s corporate governance of the companies. In recent years, the world economy has undergone very considerable change and has increasingly focused on development in the emerging markets. The Swedish economy is one of the world s most export-dependent and Swedish companies compete in a global market. Both state-owned and privately-owned companies need to evolve continuously to maintain their position and strengthen their competitiveness, particularly in innovation and digitalisation. One of the main tasks of the management organisation is to set and monitor targets for state-owned companies. Most of the companies have financial targets that are regularly reviewed. Companies with public policy assignments have public policy targets to assess how well their public policy assignments are being fulfilled. As from 2015 a sustainability analysis is linked to the financial targets and public policy targets. This analysis serves to highlight relevant risks and opportunities in the area of sustainable business practices with regard to climate change, gender equality, human rights and labour rights, for example. The financial targets, public policy targets and monitoring of the strategic sustainability targets are important tools in our 4 ANNUAL REPORT STATE-OWNED COMPANIES

7 FOREWORD Key words for the governance of state-owned companies are: transparency, active ownership, professionalism and good order. corporate governance to be able to clearly communicate our expectations as an owner. Turnover in the state-owned company portfolio declined by 2 per cent in, while the companies combined profit rose from SEK 14 billion to SEK 16 billion. The improvement in profit is primarily a consequence of a lower non-recurring impairment in Vattenfall s continental European operations being recognised than in The underlying operating profit in the companies remains stable with the exception of LKAB s earnings, which are strongly affected by sharply declining iron ore prices. The value of the state-owned company portfolio, calculated at the end of, decreased from SEK 500 billion to SEK 460 billion, compared within the preceding year. The change is a consequence of decreased value in primarily Vattenfall and LKAB. My ambition is for the state to be an active owner and, through professional portfolio governance, be clear in its ownership role, both in relation to the companies and to society in general. I take a positive view of the development of our companies and look forward to supporting the state-owned companies continue to generate long-term value and to contribute to the development of our society. Stockholm, June 2015 Mikael Damberg MINISTER FOR ENTERPRISE AND INNOVATION, MINISTER RESPONSIBLE FOR THE STATE-OWNED COMPANIES ANNUAL REPORT STATE-OWNED COMPANIES 5

8 EVENTS IN BRIEF Events in brief Increased provisions at Vattenfall due to lower market interest rates After an extended period of falling market interest rates, Vattenfall has decided to lower the discount rate in its calculation of pension provisions, both in Sweden and Germany, as well as for other provisions in Germany, primarily for future expenses for the decommissioning of nuclear power. This has resulted in the provisions on the balance sheet increasing by SEK 8.7 billion and the adjusted net debt increasing by SEK 9.3 billion. Praise for state-owned companies sustainability reports During the year, LKAB s sustainability report for 2013 was named as Sweden s best by FAR the professional organisation for auditors in Sweden. Among other things, the report was praised for presenting the company s sustainability work as a natural part of the business strategy with each strategic area including dimensions of sustainability. This year, FAR also presented a second place award, which went to SEK. Forest products group SCA received the third place award. Swedfund and ball bearing manufacturer SKF received honourable mentions. For more than a decade, the FAR has presented annual awards for exemplary non-financial reporting. Campaign to prevent purchasing of alcohol for minors In June, Systembolaget s campaign to prevent purchasing of alcohol for minors was visible.the campaign included Tonårsparlören (Teenager phrasebook), a website and book on how to talk about alcohol with minors. The book was distributed to parents of teenagers during the spring by Systembolaget s subsidiary IQ-initiativet. Svenska Spel strengthens its collaboration with Swedish soccer Svenska Spel continues to sponsor Swedish soccer. In March, a comprehensive agreement was signed regarding principal sponsorship. The collaboration is valued at slightly more than SEK 928 million and extends six years into the future. This includes a major venture in Swedish elite ladies soccer and talent development. TeliaSonera buys Tele2 in Norway TeliaSonera is acquiring Tele2 s mobile operations in Norway. The operations are valued at SEK 5.1 billion. The transaction will increase TeliaSonera s market share in mobile telephony in Norway from about 23 to 40 per cent, while the number of mobile subscriptions will rise from 1.6 million to 2.7 million. TeliaSonera has also pledged to reach 98 per cent of Norway s population with 4G coverage by LKAB and Kiruna agree on infrastructure compensation In May, LKAB and the municipality of Kiruna signed an agreement regulating compensation for infrastructure including streets, roads, and water and sewerage mains investments in schools, emergency services, libraries and other community buildings that are necessary when moving the town centre as the mine expands. The compensation will amount to SEK 3.74 billion. Bostadsgaranti to be phased out In May, an Extraordinary General Meeting of AB Bostadsgaranti resolved to divest the subsidiary Försäkringsaktiebolaget Bostadsgaranti. The divestment is part of the ongoing phase-out of Bostadsgaranti as a whole. The company s remaining operations are expected to be wound up by ANNUAL REPORT STATE-OWNED COMPANIES

9 EVENTS IN BRIEF Almi lends SEK 1.2 billion to innovative companies Almi is launching a new Growth Loan for innovative businesses. Over a two year period, Almi will lend SEK 1.2 billion to innovative companies throughout Sweden. The Growth Loan is made possible by a guarantee agreement between the European Investment Fund and Almi.With the new Growth Loan, more companies with growth potential will have the opportunity to finance continued development and growth. Akademiska Hus Aula Medica named Building of the Year In March, Aula Medica, which Akademiska Hus built at the Karolinska Institute s Solna Campus, was named Building of the Year by building sector magazine Byggindustrin. The building has been environmentally certified in accordance with Green Building, the EU s system for energy efficient buildings. Aula Medica is also certified according to the Sweden Green Building Council s Silver standard. SSC acquired ground station in Canada In January, SSC, the Swedish Space Corporation, acquired the outstanding shares in PrioraNet Canada Ltd., in which SSC was already a part owner. The company operates the Inuvik ground station located in northern Canada. The station in Inuvik represents a step in the strategic strengthening of SSC s global network of earth stations. Workshops on sustainability Metria initiated collaboration on national elevation model In the spring of Metria initiated a partnership where it will, with its customer Lantmäteriet (Swedish National Land Survey) and subcontractors, complete a comprehensive national elevation model for Sweden. Eighty per cent of the country s surface has already been mapped via laser scanning now, the remaining 20 per cent, the mountainous regions, will be completed. The National Elevation Model (project NH ) was in progress in and is continuing in In, the state-owned companies management organisation conducted three workshops on different themes relating to sustainability: diversity, GRI G4 (the latest sustainability reportingguidelines) and ecosystem services (the services natural ecosystems provide to man). The purpose of the small-group workshop format was to enable more in-depth know ledge transfer on specific themes. Some 25 people from state-owned companies participated in each meeting. In 2015, workshops are planned on the UN Guiding Principles on Business and Human Rights. SAS issued preference shares and terminated the state s loan commitment When, in 2012, SAS presented a new business plan to strengthen the company s competitiveness, the Swedish state, together with the Norwegian and Danish states and a number of private players, issued a loan commitment, known as an RCF, to SAS for a total SEK 3.5 billion, which was later renegotiated to SEK 2.0 billion. The aim was to secure the company s access to liquidity. Since then, SAS s financial position has improved and, in February, the company strengthened its financial position by issuing preference shares corresponding to SEK 3.5 billion to investors and the general public. Having raised this capital, SAS terminated the loan commitment. ANNUAL REPORT STATE-OWNED COMPANIES 7

10 EVENTS IN BRIEF Savings programme at PostNord In the autumn, PostNord initiated a savings programme aimed at generating approximately SEK 500 million in annual savings. The programme reduces the number of employees by approximately 800 in administration and other support functions, mostly in Denmark. The negotiations with the unions were completed in December in Denmark and in January 2015 in Sweden. History written as Rosetta spacecraft lands on comet In November, the European Space Agency s (ESA) Rosetta spacecraft, which has been chasing a comet through space for ten years, succeeded landing the probe Philae on the comet s surface. This is the first time in history a landing of this kind has been carried out and it has been described as one of the most complex space missions ever. The objective is to learn more about the origins of the solar system. SSC, the Swedish Space Corporation, has participated in the project through LSE Space and Aurora. Sveaskog land impacted by the forest fire in Västmanland The huge forest fire that broke out in the province of Västmanland in August affected some 1,500 hectares of Sveaskog s land holdings. Sveaskog had a large number of people in place who helped both with firefighting and the mopping up process. Sveaskog is now planning to turn its fire-ravaged forest land in the area into an ecopark. The ecopark will entail a conservation measure safeguarding the survival of species favoured by and dependent on fire throughout central Sweden. New investments by Fouriertransform During, Fouriertransform invested a total of SEK million in five new companies: ÅAC Microtec AB in Uppsala, Pelly AB in Hillerstorp, Osstell AB in Gothenburg, APR Automation AB in Arvika and SMP Parts AB in Ilsbo, as well as SEK million in existing portfolio companies. In February 2015, ÅF AB (publ) acquired all shares in Fouriertransform s portfolio company LeanNova Engineering in Trollhättan. Fouriertransform also divested 51 per cent of the shares in Vicura AB to AVL List Gmbh. Miljöstyrningsrådet in liquidation Aktiebolaget Svenska Miljöstyrningsrådet entered liquidation during. This occurred as a result of the Government s decision regarding a unified procurement support service, meaning that the procurement support tasks previously conducted by Miljöstyrningsrådet were transferred to the state and have been reassigned to the Swedish Competition Authority since 1 July. Swedavia takes over handling at regional airports Following an agreement with SAS, Swedavia has taken over handling services at five regional airports from SAS Ground Handling (SGH). On 1 November, Swedavia assumed responsibility at Kiruna Airport, Luleå Airport, Umeå Airport, Åre Östersund Airport and Ronneby Airport. 8 ANNUAL REPORT STATE-OWNED COMPANIES

11 EVENTS IN BRIEF LKAB issues bonds for SEK 2 billion In December, LKAB successfully issued bonds for a total of SEK 2 billion as part of its newly established MTN programme. The programme encompasses a loan framework of SEK 7 billion and permits bonds to be issued in the Swedish market. The bond loans have a maturity of five years and are divided into two tranches, one with a fixed interest rate and one with a variable rate. The bonds will be listed on the NASDAQ Stockholm exchange. The purpose of establishing an MTN programme is to further increase LKAB s financial flexibility and its presence in the capital market. Continued efficiency enhancement at SJ Within the framework of the improvement programme that is to reduce SJ s costs by SEK 1 billion in administration and sales, a total of 400 employees were served notice of termination in January. Eighteen of SJ s travel agencies, including the one in Copenhagen, were phased out during the first quarter. At the same time, SJ announced that it would be closing its service centre in Tranås, affecting a total of 95 permanent employees. In the second quarter, SJ s service centre operations were concentrated at the Ånge facility. Infranord in European partnership on railway development Infranord, as well as the Swedish Transport Administration and Vossloh, is part of the compre hensive development project Shift2rail. 26 European countries will be participating over a period of seven years. The project addresses energy, transport management, infrastructure, IT and rolling stock. The aim is to find ways to more rapidly develop railways throughout Europe. Increased operational reliability, greater capacity and lower lifecycle costs are on the agenda. SBAB has Sweden s most satisfied mortgage customers SBAB wins first place, with a good margin ahead of the major banks, in Swedish Quality Index s annual customer satisfaction survey in residential mortgages. SBAB gained the highest scores in most of the question categories in the survey, including value for money, service, satisfaction, image and expectations. Changes in the state-owned companies management organisation following the elections The September parliamentary elections and new Government entailed certain changes in the state-owned companies s management organisation. The management of 41 of the 49 companies wholly or partly owned by the Swedish state is now assigned to the Ministry of Enterprise and Innovation. As of 2015, the organisation has also been responsible for managing the European company EUROFIMA and the Industrifonden and Norrlandsfonden foundations. Eight companies are managed by the Ministries of Finance, Culture, Health and Social Affairs, and the Ministry for Foreign Affairs. More young people visited Dramaten In addition to the productions that primarily target children and young people at Unga Dramaten, a relatively large and young audience also attends theatre performances on the other stages. In, the number of tickets with child and youth discounts totalled 55,290, which is an increase by more than 20 per cent compared with Unga Dramaten has moved back to the Dramaten Theatre to continue developing its operations there. Safe pharmaceuticals at Apoteksgruppen s pharmacies. One of Apoteksgruppen s strategic sustainability objectives is to increase the use of EES (electronic expert support) in connection with the dispensing of prescriptions in Apoteksgruppen s pharmacies and this is now taking place to an increasing extent. The aim is to detect incorrect dosages and inappropriate combinations of pharmaceuticals for individual customers. Each year, incorrect usage of pharmaceuticals causes considerable suffering for individuals and major costs for healthcare. ANNUAL REPORT STATE-OWNED COMPANIES 9

12 HOW STATE-OWNED COMPANIES ARE MANAGED Infranord provides operation and maintenance, but also new construction of railways in Sweden and Norway. Photo: Infranord 10 ANNUAL REPORT STATE-OWNED COMPANIES

13 HOW STATE-OWNED COMPANIES ARE GOVERNED ACTIVE OWNERSHIP Active ownership The state-owned company portfolio, consisting of 49 wholly and partly owned companies, is valued at SEK 460 billion and employs about 163,000 people. Combined, the companies comprise a significant share of the Swedish business sector. It is the state s ambition to be an active and responsible owner. Within the Ministry of Enterprise and Innovation, there is an organisation specialised in generating value in the companies. Organisationally, this is separated from the market-regulating agencies in other parts of the Government Offices. It is responsible for the development and management of most state-owned companies. Management is conducted in accordance with state s corporate governance documents, which have been compiled in the State s Ownership Policy. THE GOVERNMENT S MANDATE AND PRINCIPLES The Government is mandated to actively manage the state s assets. The Government Offices with the ten ministries assist the Government in its work and execute this management. The Government Offices currently manage 49 companies 1) in accordance with the State s Ownership Policy, of which 41 are wholly owned and 8 are partly owned. In addition, an European company and two operating foundations are also governed according to the same principles. As per December, the estimated combined value of the company portfolio was approximately SEK 460 billion. Combined, the state-owned companies and their subsidiaries employ about 125,000 people, and if associated companies 2) are included, the companies employ 163,000 people. Among the state-owned companies, there are numerous strong brands. In many cases, the companies play an important role in Swedish society, with many having begun as state enterprises, business operations within a public authority or as state monopolies. To operate efficiently and to improve the conditions for competition neutrality in markets that are also targeted by new, private players, these operations have subsequently been corporatized. The majority of state-owned companies now operate in fully competitive markets where the overarching objective of stateownership for the companies operations is to generate value over the long term. As mandated by the Riksdag, the Government is required to actively manage the state s holdings in companies in order to MANAGEMENT ORGANISATION The Riksdag The Government The Government Offices The Ministry of Enterprise and Innovation Departement for Innovation and Stateowned Companies Other ministries responsible for companies Division for State-owned Enterprises Division for Corporate Governance and Analysis 1) Since the 2013 Annual Report, the number of companies has decreased from 50 with the state phasing out the operations of the company Svenska Miljöstyrningsrådet. The 49 companies include Svenska skeppshypotekskassan, which, however, is not a limited company but a special form of association under public law. The operating foundations Industrifonden and Norrlandsfonden and the European company EUROFIMA are not included in the aggregated figures for employees or sales. 2) The associated companies are those in which the state owns per cent, and include Bostadsgaranti, Dom Shvetsii, SAS, SOS Alarm, TeliaSonera and VisitSweden. ANNUAL REPORT STATE-OWNED COMPANIES 11

14 HOW STATE-OWNED COMPANIES ARE GOVERNED ACTIVE OWNERSHIP ensure the best possible long-term value development and where applicable to ensure that public policy assignments are performed well. The focus of many of the companies operations and public policy assignments means that the state is expected to continue being a major company owner. The Government takes the view that the companies should be managed actively and professionally, with long-term value creation as an overarching goal, and, where relevant, ensuring that specifically adopted public policy targets are performed well. This means that the companies must act efficiently, profitably and long term, and should be afforded capacity for development. State-owned companies should act as role models in the area of sustainable business and should otherwise behave in a manner that instils public confidence. This is the overall focus of the Government Offices ongoing management and corporate governance. MANAGEMENT ORGANISATION The Minister for Enterprise and Innovation is responsible for a unified overarching ownership policy with regard to the stateowned companies, and is the minister responsible for most of the companies. Accordingly, the Ministry of Enterprise and Innovation has an organisation specialised in corporate governance and investment management 1), which is organisationally separate from the Government Offices market-regulating operations and which focuses on generating value in the companies. This organisation, which operates within the Departement for Innovation and State-owned Companies, is responsible for the development and governance of 41 of a total of 49 state-owned companies that are managed by the Government Offices, and is divided into two divisions working in close cooperation. The Division for State-owned Enterprises employs investment directors who work on the company boards, coordinate ongoing contacts with the companies and lead the organisation s ongoing work with the holdings. The division also includes a function responsible for communications and investor relations, including financial information and stakeholder dialogue. The Division for Corporate Governance and Analysis is responsible for company analysis, sustainable business, business law, board recruitment and overarching corporate governance documents, such as the State s Ownership Policy, as well as work on and monitoring of financial targets and public policy targets. For a small number of state-owned companies, responsibility for administration lies with other parts of the Government Offices: the Ministry of Finance, the Ministry of Culture, the Ministry of Health and Social Affairs, the Ministry of Education and Research and the Ministry for Foreign Affairs. The Government s principles for active ownership and corporate governance also encompass these companies. MANAGEMENT COSTS In, the management organisation costs amounted to SEK 48.3 (56.2) million, corresponding to 0.01 per cent of the assets under management. Of this, SEK 12.5 (20.2) million was for services procured externally, including fees for financial, economic and legal advice, and for the preparation of the Annual Report and the Government Offices interim reports for state-owned companies. The costs for the management organisation consist primarily of salaries but also of other current expenses, such as travel and office supplies. Costs for investment management within other ministries are not included, as they mainly consist of salaries that are also attributable to other tasks within each ministry. INVESTMENT TEAMS FOR EACH STATE-OWNED COMPANY Work to develop and manage the individual holdings are mainly conducted based on investment teams for company holdings in the management organisation. For each state-owned company, there is a investment team of comprising expertise from the two aforementioned divisions. The investment teams for each stateowned company holding deal with all ongoing matters of ownership involving the managed state-owned companies. The work of the investment teams for state-owned company holdings is coordinated and led by an investment director. The investment teams for state-owned company holdings also include investment managers, legal counsels, recruiters, communicators and specialists in sustainable business, each of whom can head individual projects within the framework of the investment teams for state-owned company holdings. This composition helps ensure that the groups INVVESTMENT TEAMS FOR EACH STATE-OWNED COMPANY HOLDINGS Board recruiters Legal counsels Communications INVESTMENT DIRECTOR Sustainable business Investment managers 1) On 1 January, the organisation was transferred from the Ministry of Finance to the Ministry of Enterprise and Innovation. The investment teams for each state-owned company holdings deal with all ongoing matters of ownership involving the managed companies. 12 ANNUAL REPORT STATE-OWNED COMPANIES

15 HOW STATE-OWNED COMPANIES ARE GOVERNED ACTIVE OWNERSHIP have good insight into the business environments of the companies and their markets, as well as an understanding of the challenges and risks facing the companies, allowing the management organisation to set requirements and to develop the companies. The investment teams analyse each state-owned companies operations, markets, competitors, and sustainable business practices, helping ensure the value creation in the state s holdings through active ownership. Various aspects of ownership are addressed, such as the forward looking strategy and changes in the market, board changes, dividend levels and target fulfilment (read more about the investment teams for company holdings on p.14). POLITICAL LEADERSHIP In addition to the Minister for Enterprise and Innovation, certain other ministers are also responsible for companies. The relevant ministers and their political advisers hold regular progress meetings with the chairmen and executive management teams of the state-owned companies, so-called ownership meetings, with the purpose of reviewing the companies operations and performance in relation to financial targets, public policy targets and sustainability work. Owner meetings are prepared by the relevant investment teams. When companies face particularly critical decisions, their boards coordinate their views with the political leadership in a process of ownership coordination. THE STATE S MODEL OF CORPORATE GOVERNANCE The state s corporate governance document, the ownership policy (the State s Ownership Policy and guidelines for state-owned companies), specifies the framework for investment management and clarifies the relationship between the owner, board and management. In the ownership policy, the Government details its management mandate and its positions on key princi- RESPONSIBLE MINISTRIES Ministry of Enterprise and Innovation Akademiska Hus Almi Företagspartner Apoteket Apoteksgruppen Arlandabanan Infastructure Bilprovningen Bostadsgaranti EUROFIMA Fouriertransform Green Cargo Göta kanalbolag Industrifonden Infranord Inlandsinnovation Jernhusen Lernia LKAB Metria Norrlandsfonden Orio PostNord RISE Samhall SAS SBAB SEK (Svensk Exportkredit) SJ SOS Alarm Specialfastigheter SSC (Svenska rymdaktiebolaget) Statens Bostadsomvandling Sveaskog Svedab Svenska Skeppshypotek Svenska Spel Svevia Swedavia Swedesurvey Swedfund TeliaSonera Teracom Boxer Group Vasallen Vattenfall VisitSweden Ministry of Finance Miljömärkning Sverige Ministry of Culture Kungliga Dramatiska Teatern Kungliga Operan Voksenåsen Ministry of Health and Social Affairs APL (Apotek Produktion & Laboratorier) Systembolaget Ministry of Education and Research ESS (European Spallation Source) Ministry for Foreign Affairs Dom Shvetsii FRAMEWORK FOR STATE-OWNED COMPANIES State-owned companies Publicly traded companies Public authority Legal framework Companies Act The State s Ownership Policy Companies Act, Listing agreement Administrative Procedure Act Government Agencies Ordinance Ordinance with instructions Operations and assignments Operations section in the Articles of Association Owner instruction 1) Operations section in the Articles of Association Appropriation Government resolution on specific assignment Highest decision-making body Annual General Meeting Annual General Meeting General Director of agency/board or committee 1) Occurs primarily where companies have public policy assignments, see ownership policy, page 122. The comparison with a public authority serves to illustrate the considerable difference between companies and authorities in terms of their governance. ANNUAL REPORT STATE-OWNED COMPANIES 13

16 HOW STATE-OWNED COMPANIES ARE GOVERNED ACTIVE OWNERSHIP Active investment teams for company holdings a strength in connection with difficult ownership issues SWEDAVIA Several crucial issues have affected the state s ownership of Swedavia. Central to its corporate governance has been a well-functioning and active investment team. Within the management organisation, there is a investment team for each individual holding that analyses and manages all of the issues affecting the state in its role as owner. In the Swedavia investment team, the activity level has been particularly high over the past two years. Among other things, the group has worked with impact assessments regarding Arlanda Airport s environmental permit and Bromma s contested air traffic, analyses of pricing regulations and new financial targets, and public policy targets. In parallel with these issues, which are of vital company importance, the investment team also addresses recurring issues such as following up on performance in relation to targets, analysing Swedavia s sustainability targets and efficiency, and evaluating the Board s work and composition. As owners, we must understand the company s challenges and pay attention to issues affecting the company both in the short and very long term. Since its incorporation five years ago, Swedavia has undergone a significant transformation. At the same time, to meet new passenger flows at key Swedish airports, the company needs a planning and investment horizon of 30 years, explains Jenny Lahrin, investment director at the Ministry of Enterprise and Innovation. The investment team, which is coordinated by the investment director, also includes a investment manager, a legal counsel, a sustainability expert and a board recruiter. As a member of the board of Swedavia, Jenny Lahrin also contributes to deepening the group s knowledge and understanding of various issues within the company. Our work in the Swedavia s investment team has always been well-oiled because my colleagues have always realised the need to take the initiative and have pursued many issues themselves. With their expertise, the other members of the group have both complimented and challenged the image I have conveyed of the company, adding additional perspectives. Overall, this dynamic within the group has enhanced the end product in all of our projects thus not only improving the conditions for corporate governance, but also increasing our preparedness for dealing with difficult standpoints relating to Swedavia, says Jenny Lahrin. Group meetings are held at strategic times over the financial year. Parts of the group also meet with the company and other players within the framework of certain analysis projects. Examples of this include reviewing financial targets and specifically adopted public policy targets to designing Swedavia s public policy assignment. Both are projects pursued by the investment manager and resulting in resolutions at the Annual General Meeting. This high activity level is expected to continue. In addition to monitoring the company s performance, the group has, for example, initiated an efficiency analysis to better comprehend the company s journey from an state enterprise to a company. The group also prepares the political leadership s meetings with the chairman and the CEO, and participates in these meetings. Over the year, the team visited Bromma and Arlanda Airports, Swedavia s communications department and Commercial Services to better understand the business and price regulation process. We both improve and simplify our corporate governance when we have a good basic knowledge of the company s major issues. For example, our legal counsel has had detailed knowledge of the company s on-going legal processes, enabling us as owners to assess early the possible consequences, says Jenny Lahrin. The team s work represents our ambition to reflect on past challenges, plan for the future and share current information, which contributes to more efficient management of the company. During, the Swedavia group consisted of Jenny Lahrin, investment director, Per Lundqvist, investment manager, Christina Detter, board recruiter, Christine Leandersson, legal counsel and Jens Schlyter, sustainable business. Photo: Jörgen Ulvsgård 14 ANNUAL REPORT STATE-OWNED COMPANIES

17 HOW STATE-OWNED COMPANIES ARE GOVERNED ACTIVE OWNERSHIP ples regarding corporate governance and investment management. In terms of company law, the state-owned companies are controlled in the same way as private limited liability companies, with the Companies Act as their general framework and with the Annual General Meeting as the company s highest governing body. The ownership policy is fully applied in companies in which the state is the majority shareholder. In companies where the state is a joint owner, the management organisation engages in a dialogue with the other owners to ensure that the State s Ownership Policy is applied. The management organisation s legal counsels are responsible for the investment management complying with the ownership policy. They also play a central role as the investment teams for company holdings internal advisors on business law in various projects (read the complete ownership policy on p.122). Board nominations form an important part of the corporate governance of the state-owned companies. The management organisation includes recruitment specialists who are responsible, within the investment teams for company holdings, for the process of assessing the existing boards, performing needs analyses based on the companies operations and challenges, and for the process of recruiting chairmen and board members (read more about board nominations on p.20). The role of investment director encompasses responsibility for project management in the management of a number of companies in which the investment director is normally also a board member. The investment directors board work provides vital expertise to the boards, and contributes to the knowledge of the investment teams for company holdings on the companies. The investment management of the publicly traded companies is also based on investment teams for company holdings. In these companies, the state is represented in the nomination committees but not the board. The requirement for transparency in the state-owned companies is intended to maintain confidence in the companies among the public and in trade and industry. State-owned companies are subject to the same external financial reporting requirements as publicly traded companies (read more about the companies on p.50 and the complete guidelines for external reporting on p.126). Confidence-building communications represent an important aspect of the investment teams for company holdings work, and are supported by specific expertise in communications. This annual report provides a summary account of the management of state-owned companies. In its annual communication to the Riksdag, the Government provides an account of the past year s management of state-owned companies. Addi- ACTIVE OWNERSHIP Investment teams for each individual holding Transparency requirements Work on the company boards Owner meetings, on-going dialogue ACTIVE OWNERSHIP Nomination of boards ACTIVE OWNER- SHIP WITHIN THE FRAMEWORK OF THE STATE S OWNERSHIP POLICY Targets and follow-up ANNUAL REPORT STATE-OWNED COMPANIES 15

18 HOW STATE-OWNED COMPANIES ARE GOVERNED ACTIVE OWNERSHIP tionally, two interim reports on the financial performance of the state-owned companies are published annually. Monitoring of different targets plays a central role in the dialogue between the companies and the state in its capacity as owner. The regular ownership meetings where the management organisation and the political leadership meet the chairmen of the Board and executive management, monitor the companies performance in relation to established targets. Targets enable the performance of the companies to be measured and, where targets are not met, the owner may request a plan from the companies for the implementation of measures. The targets may be strictly commercial or based on public policy assignments, or may be long-term strategic sustainability targets. Financial targets are not set as unilateral demands but through a dialogue between the owners and the company, to enhance the quality of the targets and ensure that they are realistic. The overall purpose of the targets is to optimise the development of value in the state-owned companies and for operations to be conducted efficiently. The setting and monitoring of financial targets forms an important part of the work of the investment teams for company holdings. Work is conducted in accordance with an established process and builds on an analysis of the company s challenges, market and operations led by the investment manager. The Government Offices consider continuously how the targets can be revised since a company s internal and external conditions change as the external environment changes. To encourage an exchange of experiences between the state-owned companies on, for example, financial targets and reporting, the management organisation has initiated a network of CFOs, which met on a few occasions in (read more about the work with financial targets on p.26). Sustainable business is a prerequisite for the companies longterm survival. The sustainability targets set by the company boards should be few in number, strategic and measurable. Since, target fulfilment has been monitored by the owner. To increase transparency, the state-owned companies are obliged to report their activities in accordance with the Global Reporting Initiative, GRI. In the investment teams for company holdings, specialists in the area of sustainable business work together with the other members of the investment teams on, for example, the monitoring of the companies sustainability targets and work on sustainable business. In, the process for evaluating the companies work with sustainable business continued to be developed and integrated into both the development of new financial targets and the overall evaluation of the companies (read more about work on sustainable business on p.32). Certain state-owned companies are tasked by the Riksdag with specifically adopted public policy assignments, which are formulated in their Articles of Association and that may be stated in more detail in an owner instruction. The public policy assignments in the state-owned company portfolio have been mapped out. To assess how well the companies perform their assigned public policy assignments, a process has been developed to identify and monitor the public policy targets linked to the public policy assignments (read more about the work with public policy targets on p. 38). CHANGES IN THE COMPANY PORTFOLIO While the state did not divest any companies in, it did initiate the phasing out of the operations of Apotekens Service, Ersättningsmark i Sverige and Svenska Miljöstyrningsrådet. The liquidation of Apotekens Service was completed in and the liquidation of Ersättningsmark i Sverige during Furthermore, in, the Government was authorised by the Riksdag to divest assets and liabilities in ESS AB to a consortium for European research infrastructures and to liquidate the company. The Government also currently has the Riksdag s authorisation to decrease or liquidate the holdings in Bilprovningen, Bostadsgaranti, Lernia, Orio (formerly Saab Automobile Parts), SAS, and Svensk Exportkredit (SEK). MANDATE TO CHANGE STATE OWNERSHIP Company Current shareholding, % Mandate to change shareholding to, % Bilprovningen Bill 2009/10:54, Report 2009/10:NU10, Riksdag Communication. 2009/10:162 Bostadsgaranti 50 0 Bill 2012/13:1, Report. 2012/13:NU1, Riksdag communication. 2012/13:103 Lernia Bill 2012/13:1, Report. 2012/13:NU1, Riksdag communication. 2012/13:103 Orio Bill 2012/13:99, Report. 2012/13:FiU21, Riksdag communication.2012/13:287 SAS Bill 2009/10:121, Report. 2009/10:FiU35, Riksdag communication. 2009/10:220 SEK Bill 1995/96:141, Report. 1995/96:NU26, Riksdag communication. 1995/96:302, Bill 2002/03:142, Report 2002/03:NU14, Riksdag communication. 2002/03:244 Decision 16 ANNUAL REPORT STATE-OWNED COMPANIES

19 HOW STATE-OWNED COMPANIES ARE GOVERNED Apoteksgruppen focuses on health, particularly through the Hälsokällan concept, which was expanded with several new products over the year. Photo: Apoteksgruppen ANNUAL REPORT STATE-OWNED COMPANIES 17

20 HOW STATE-OWNED COMPANIES ARE GOVERNED COMPANY CASE Svevia transition from public authority into a company Three years of extensive restructuring has resulted in construction and installation company Svevia progressing from considerable losses into profitability while significantly reducing the level of risk. In 2009, two production units within the former Swedish Road Administration that exercised no official authority were incorporated as companies. The consulting operations within the Swedish Road Administration and the Swedish Rail Administration were combined to form Vectura Consulting AB and the road construction, surfacing, equipment and property operations in Vägverket Produktion within the former Swedish Road Administration became Svevia AB. Operating as an independent company represented a major realignment and, despite adjustment measures within Svevia, the company did not manage to bring its underlying profitability under control during the initial years following incorporation. Svevia s leadership changed in October 2011 with the appointment of the company s current CEO, Torbjörn Torell, who has an extensive background as the CEO of several different types of construction companies. One of the CEO s first measures was to conduct a thorough analysis of Svevia s existing business projects and work processes. This work resulted in major impairments, mainly in road construction projects, the profitability of which was found to be lower than previously estimated. At the same time, a multi-year action programme was launched and the company was reorganised. The action programme targeted more efficient control of projects and strengthened leadership, but also developing the Svevia s CEO Torbjörn Torell and chairman Olof Ehrlén. Photo: Svevia company s business focus and reducing costs. In some cases, profitability is generated through economies of scale, such as in the maintenance of the country s road network where Svevia has a 30 per cent market share and where the reorganisation contributed to specialisation and better coordination between different road areas. In other cases, the measures have resulted in improved risk management, with Svevia developing methods to identify the projects and assignments on which the company should bid. The 2013 Annual General Meeting elected a new chairman: Olof Ehrlén, who has extensive experience of the industry, most recently as In the operation and maintenance of roads, Svevia is the market leader in Sweden with a market share of slightly less than 30 per cent the country s road network. Photo: Patrick Trägårdh/Svevia 18 ANNUAL REPORT STATE-OWNED COMPANIES